* Continuing Market Weakness - Tuesday saw 351 new 20-day highs and 3649 lows across the NYSE, NASDAQ, and ASE. Of those 3649 lows, 2177 were also 52-week lows. Among NYSE common stocks, new annual lows expanded to 456, with 11 new highs. Meanwhile, we continue to see weakness in those sectors that have been leading the retreat, most notably bank/financial shares and housing-related issues. I will continue to update indicators via the Twitter posts.

* Sentiment Spike? - An alert reader reminded me of this post and pointed out that we are seeing the same pattern repeated at present. Indeed, equity put volume has now exceeded equity call volume for seven consecutive trading sessions, a situation that in the recent past has been associated with market bounces.

* Tax-Free Bond Pricing by Geography - I took a look at four Vanguard state-specific long-term, tax-free bond funds. Two are from formerly hot real estate regions, California (VCITX) and Florida (VFLTX), and two are from the northeast, Massachusetts (VMATX) and New York (VNYTX), which has experienced less boom/bust. Recall that I found bank performance weakest in the West and Southeast. Since July of 2007 (chart at top), we've seen the weakest price performance among the tax-free funds in California. Florida and California tax-free bonds in the funds are yielding about 20 basis points more than bonds from N.Y. and Massachusetts for bonds of similar duration. Should housing and economic slowdown progress to the point of threatening the budgets of municipalities, I would expect these divergences to widen.

* Changing Expectations - Note the rally of short-term Treasury note prices (SHY) to multi-week highs. We've seen two-year notes lose something on the order of 30 basis points in just the last two trading sessions, a huge move for that market. This suggests quite a shift in rates sentiment from inflationary concerns (and anticipation of Fed tightening) to recessionary concerns (and anticipation of growing economic weakness)..

About Me

Author of The Psychology of Trading (Wiley, 2003), Enhancing Trader Performance (Wiley, 2006), The Daily Trading Coach (Wiley, 2009), Trading Psychology 2.0 (Wiley, 2015), and Radical Renewal (2019) with an interest in using historical patterns in markets to find a trading edge. As a performance coach for portfolio managers and traders at financial organizations, I am also interested in performance enhancement among traders, drawing upon research from expert performers in various fields. I took a leave from blogging starting May, 2010 due to my role at a global macro hedge fund. Blogging resumed in February, 2014, along with regular posting to Twitter and StockTwits (@steenbab). I teach brief therapy as Teaching Professor at SUNY Upstate in Syracuse, with a particular emphasis of solution-focused "therapies for the mentally well". Co-editor of The Art and Science of Brief Psychotherapies (American Psychiatric Press, 2018). I don't offer coaching for individual traders, but welcome questions and comments at steenbab at aol dot com.